Basics of Fundamental Analysis

Trading in the Forex markets requires intimate knowledge in the fundamental analysis of market conditions and specific trading patterns before making a trade.

Fundamental Analysis is a systematic procedure that broadly follows the market trends and economic conditions of a country or an international region. In fundamental analysis, a trader studies first the primary economic indicators and movers at a given period before he/she goes short or long on a currency trade.

Difference between Technical and Fundamental Analysis

As said above, fundamental analysis basics deal with major factors affecting the economic state of the nation, and other significant forces such as social and political happenings, international relations, and even natural disasters. Simply speaking, fundamentalists study the general economic status of a nation and make informed currency trade decisions based on how well or how badly the economy is going.

Basics of Fundamental Analysis

Forex traders who rely on technical analysis examine the exact movements of major currencies as evidenced in historical charts. Currency rates fluctuate in value rapidly over a period of time, and this activity is rendered on graphs and charts that show trends and the likely movements of the currency.

Which approach is better?

Smart traders know that the best results come from a balanced approach using both methods. Success comes from keeping abreast of the nation’s financial standing, economic forecasts, and general news from different sectors of the society while looking closely at the precise movements and data trends in the price charts.

Experienced traders do not find it advisable to focus entirely on either approach since cues for trade entries exist in both methods of study. It is good to learn fundamental analysis basics as well as incorporating the basics of a technical study. Go here: http://www.babypips.com/school/kindergarten/three-types-of-analysis/fundamental-analysis.html

Main Drivers and Economic Indicators of the Forex Markets

Currencies, like any other economic entity, are influenced by a myriad of factors that affect their prices. The movements of currencies and their spot prices are like the visual elements that you see in front of the computer. The processes that occur inside the computer can only be scrutinized more deeply with tools and unique methods.

This scenario is the same with economic factors, which can range from subtle financial repercussions to explosive events such as terrorist attacks and massive corporate layoffs. In fundamental analysis, there are primary drivers that every trader should be aware of and analyze well.

These includes:

  • Interest Rates – This is one of the key drivers of currency prices. If the interest rates go up, the currency prices generally increase because high-interest rates attract more foreign investors.
  • Oil – Of course, this is a no-brainer. We all know how oil and energy make the world go round.
  • Gross Domestic Product – GDP is the broadest measure of a country’s growth. A trader has to have knowledge of how much the country has economically grown or shrunk through the sum figure of all the goods and services the country has produced.
  • Retail Sales – Consumer spending patterns are deciphered here, and the figures gained from a country’s total retail sales are one of the key indicators of growth.
  • Industrial Production – This measures a country’s capacity of its factories to produce goods and raw materials.
  • Housing Starts – Traders should know the general figures of how many houses in the country have been constructed at the beginning of each month. It is important to know this since the housing sector is usually the first to be hit with the effects of interest rate changes.
    It is worth noting the traders who are more attuned to the fundamentals that affect currencies are necessarily intelligent and updated. The Oracle of Omaha and one of the world’s top richest men, Warren Buffet, relies heavily on the basic fundamental analysis of the U.S. economy. To be a successful trader, one must pay attention to the key drivers of the currencies being traded.

10 Quick Start Forex Tips

Here are 10 quick starts Forex tips to help you in entering the Forex market and conducting smart trading decisions.

Trading Forex is an immensely lucrative business because it is the most liquid market in the world. Being a successful Forex trader takes a lot of time and experience.

10 Quick Start Forex Tips

Here are 10 quick starts Forex tips for the beginning trader:

  1.  Before participating in the foreign exchange market, you need to acquire the appropriate knowledge and education needed to be a trader. Research on all the information you can find about Forex. Learn about the basics of Forex and its strategies. Take advantage of the online resources that provide Forex education. There is plenty of free, relevant Forex information out there. (For example, this site!)
  2.  You should do demo trades before you open a real trading account and risk losing real money. Many online Forex brokers offer free demo accounts, news, graphs, charts and other Forex resources for those who are still new to Forex trading. This is a great way to practice your trading skills before participating in live trading. Demo trading will also help you to familiarize yourself with your trading platform of choice. Get more here
  3.  One of the most crucial steps in Forex trading is choosing the right Forex broker. A broker refers to an individual or company that helps you buy and sell currencies. Spend as much time as necessary in researching for the right broker. Look for one that offers low spreads.It is also advisable to choose a broker that is backed by a reputable bank or institution. Make sure that your broker utilizes the latest charting and technical analysis services. They should also have accurate, real-time data because this is what will influence your trading decisions. Choose a broker that is registered with the Futures Commissions Merchant (FCM) and the Commodity Futures Trading Commission (CFTC). Also, take into consideration the variety of account options that are offered by the broker.
  4.  Make sure that the trading platform or program you choose is user-friendly and easy to understand. Check the quality and competence of the vendor’s customer support as well. In case you run into problems with your trading program, their customer support should always be prompt and equipped to assist you.
  5.  It is very important that you should have a reliable, high-speed Internet connection. This is so you can conduct your trading speedily without any trouble. In the fast world of Forex trading, there is no time for delays.
  6.  If you are a new and inexperienced trader ready to start trading real money, it is best to start with a mini account or micro account than a standard account. This is a great way for you to hone your trading skills and gain experience. Take little baby steps until you attain mastery!
  7.  Be very careful with leverage. Maximizing your leveraging is a very risky thing to do. For standard accounts (100K), it is advisable to not utilize more than 100:1 leverage. For mini accounts (10K), do not use more than 200:1.
  8.  It is best to start slow. When you do experience success, don’t make the mistake of taking things too fast too soon.  Always be careful in every move you make to ensure long-term success. Be wise and patient.
  9.  If you are a small-time trader, do not diversify. Do that only when you have more eggs to put in different baskets.
  10.  Be proactive in learning about Forex. Study economic conditions and market trends around the world. Update yourself with global news.

I hope that these 10 quick start Forex tips will prove helpful as you participate in the exciting and profitable world of foreign exchange trading. Do apply these Forex tips to your best advantage. Keep in mind that learning never stops, especially when it comes to a complex topic like Forex Trading!

Simplify Your Forex Investing By Using Automated Forex Trading

With the crisis that has impacted a lot of economies in the planet, putting a big quantity of people out of work, 1 would discover himself looking for substitute implies to make a residing and sustain his family in whichever way probable. Whether or not this is by taking up small jobs, carrying out a number of jobs throughout the training course of a day, operating part-time or simply operating from home, there is an assortment of options one particular could pick from, dependent on his expertise, profession and prior encounter. 1 such career exactly where you could constantly operate from home is by making an attempt out forex trading.

What is fx? Fx is small for ‘foreign exchange’. Forex trading is the process by which one would be in a position to purchase and sell currencies of various nations in the foreign exchange industry. This purchasing and promoting are carried out by both financial institutions, institutions and other people who would revenue tremendously from this trade. Here one would have to quite meticulously pick a pair of currencies of distinct nations and then proceed to buy one particular while at the identical time offering an additional. For this, the person getting should be ready to ascertain no matter whether the worth of the currency would rise over a period of time of time. Though these assumptions might not often be accurate, more usually than not, it would be if the trader is one particular who is very knowledgeable. He could then promote this currency for a greater price than he purchased it for, thereby producing a revenue.

Using Automated Forex Trading

If you are looking for a way whereby you could carry out forex investing devoid of as well considerably hard work, you should contemplate automated foreign exchange trading. Automated fx trading consists of the use of distinct software that would make predictions concerning the fluctuations in the industry in the value of the currency. Automated fx buying and selling will consequently, give you greater possibilities at producing a revenue.

Automated fx investing is best for beginners who want to locate their spot in the forex trading market place rapidly! Furthermore, automated forex trading will continue to operate on all occasions, reacting swiftly to any modifications it identifies in the market. Automated fx investing software program will also help you by carrying out most of your work for you, which means you have to spend less time carrying out analysis. For automated forex trading to perform efficiently nevertheless, you would want to discover yourself quite a great application. So what are you waiting for? Get started off now and see the alter it brings to your life. Visit: https://www.fxcm.com/uk/platforms/mirror-trader/

 

How Choose The Right Foreign Exchange Broker In The FOREX Market

Quality standard in the Forex market for financial services companies are the major foreign exchange brokers. Serious investors choose exactly them because of undeniable reliability. In many ways, these preferences exist due to psychological causes. So, what should we look for when deciding whether to initiate cooperation with these or that foreign exchange brokers?

Talking about the reasons why people choose foreign exchange brokers, we should start with reliability. The reliable financial agent generally considered is a broker with a long history of work, license and accountability of regulators, with the insurance industry of its responsibility to customers, well-functioning system of risk management within the company, legal transparency, and protection of contractual relations. The foreign exchange broker still has to be fairly respectable, although each of us understands this term in his own way.

How Choose The Right Foreign Exchange Broker

By itself, time of existence has no guarantees: the above-mentioned major foreign exchange brokers have existed in the market long enough. However, the risk of losing money in the company one-day is much higher than that of a broker who provides clients access to financial markets for years. The long history of work – is well-established mechanisms for risk management (otherwise, the company would already be bankrupt), qualified staff, reliable partners, financial reserves, etc. In short, foreign exchange brokers with a history of work have the advantage over newcomers to the market.

Secondly, we should mention the documents in our talk about foreign exchange brokers. Unfortunately, in practice, licenses and controllability of regulatory agencies, whether government or industry, does it guarantee the safety of your money. However, this is a serious plus in choosing a broker. First, the licensing process itself cuts off obvious fraud. The Company shall disclose to the state its owners, to provide statutory documents, financial statements. In addition, regulating authority in one or other form controls over the operational activities and financial performance of the company. Secondly, there is always the organization, where the client can file a complaint or claim on foreign exchange brokers.

Foreign exchange brokers and the spread: usually, newcomers of the Forex market when choosing a broker primarily pay attention to the magnitude of the spread. And some brokers, in turn, lure clients with catchy advertising, saying “Once we spread on … followed by the name of the currency pair … from one point and below.”  Reliable foreign exchange brokers usually are not like this.

More important about the choice of foreign exchange brokers is the execution of orders. Around the guaranteed execution of pending orders there are lots of debates. Some argue that the brokers who ensure execution of the orders take on more risks than brokers who work without it. Without going into the debate, I should note that the guaranteed execution of pending orders when dealing with a reliable dealing center – a great benefit for the client. Here is a concrete example. Imagine that before leaving the data on unemployment in the U.S. you are distracting two identical position to buy a pair of EUR / USD at a price of 1.21 per two-dealing centers. One broker has guaranteed execution of pending orders, and another – no. Fearing out of positive indicators, and as a consequence, the growth of the dollar, you are putting a stop order on the two positions at the level of, say, 1.2. After the data is that the U.S. unemployment fell much more than analysts had expected, and the course quickly drops to 1.19. In one dealing center stop order is triggered, and you commit a hundred points of loss and in the other you are left with a losing position at 200 points. Moreover, it may even increase if the rate goes lower. Of course, such situations are rare, but, nevertheless, occur, and this can lead to loss of most (if not all) funds. That is why the question with a guaranteed execution of pending orders with foreign exchange brokers is much a more important matter than the size of the spread. More post: www.profitradefx.com